While UBS (NYSE: UBS) remains the largest bank in Switzerland, this isn't helping much. In the company's latest quarterly results, there was a net loss of $552.9 million. Then again, UBS had to take some major charges, such as for the sale of its Brazilian investment bank and valuation changes on its large outstanding debts.
But there is more bad news: UBS continued to suffer from problems with its private banking division. Unfortunately, assets continue to flee (up to $25.8 billion in the prior quarter). The main reason is the U.S. crackdown on offshore tax havens, which has resulted in UBS handing over information on 4,450 accounts. Obviously, this is extremely chilling for client relationships.
Because of this reputational hit, it's likely that the client defections will continue -- eating further into cash flows. So, to deal with the problems, UBS recently snagged Robert J. McCann, who ran the "thundering herd" broker force at Merrill Lynch. Not surprising, his priority its to get back to profitability.
Yet, in the wealth management world, trust takes a long time to rebuild. And, Wall Street doesn't have much patience for this.
In Tuesday morning trading, the shares of UBS were off 5.7% to $15.82.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
11-03-2009 @ 9:12PM
ij70 said...
There is one interesting philosophy in business: What is one of the assets that any business has? Its customers.
Guess what UBS did? It betrayed its customers.